PART I [Business](index=6&type=section&id=Item%201.%20Business) Alico, Inc. is a major Florida agribusiness focused on citrus production and land management, significantly impacted by Hurricane Ian and highly dependent on Tropicana - Alico operates two primary business segments: Alico Citrus (citrus production and management) and Land Management and Other Operations (leasing for grazing, hunting, mining, etc.)[17](index=17&type=chunk)[18](index=18&type=chunk) - Hurricane Ian in September 2022 adversely impacted a majority of the company's groves, affecting the FY2023 fruit production. The company received $27.4 million in crop insurance proceeds and $0.8 million for property damage as of September 30, 2023[20](index=20&type=chunk)[21](index=21&type=chunk) - In September 2023, Alico agreed to sell 17,229 acres of the Alico Ranch to the State of Florida for approximately $77.6 million, with proceeds intended to repay variable rate debt[19](index=19&type=chunk) - The company is testing a new application of Oxytetracycline (OTC) to mitigate the effects of citrus greening, with over 35% of its trees treated as of September 30, 2023[23](index=23&type=chunk)[24](index=24&type=chunk) | Land Holdings & Activities | Gross Acreage | | :--- | :--- | | **Alico Citrus** | | | Citrus Groves & Nursery | 48,949 | | **Land Management & Other Operations** | | | Ranch, Mining Lease, Other | 22,854 | | **Total** | **71,803** | - Tropicana is a significant customer, accounting for **81.3%**, **79.7%**, and **77.5%** of consolidated revenue for fiscal years 2023, 2022, and 2021, respectively[50](index=50&type=chunk) [Risk Factors](index=12&type=section&id=Item%201A.%20Risk%20Factors) Alico faces significant risks from adverse weather, citrus diseases, high customer concentration, market volatility, and substantial indebtedness - **Business Risks:** - **Weather & Natural Disasters:** Geographic concentration in Florida makes the company highly vulnerable to hurricanes and tropical storms, which can destroy crops and affect production for multiple seasons, as seen with Hurricane Ian[72](index=72&type=chunk)[74](index=74&type=chunk) - **Citrus Disease:** Citrus greening and citrus canker are widespread in Florida and exist in the company's groves, posing a significant threat to productivity and increasing costs, with no known cure for either disease[75](index=75&type=chunk)[76](index=76&type=chunk)[78](index=78&type=chunk) - **Customer Concentration:** High dependence on Tropicana (**81.3%** of revenue in FY2023) creates significant risk. The loss or a significant reduction in business from this customer would materially harm revenue and financial position[84](index=84&type=chunk)[85](index=85&type=chunk) - **Seasonality & Market Volatility:** The citrus business is seasonal, with most revenue generated in the second and third quarters. Earnings are sensitive to unpredictable fluctuations in market supply and prices[100](index=100&type=chunk)[103](index=103&type=chunk) - **Financial & Corporate Risks:** - **Indebtedness:** Significant debt (**$129.3M** as of Sept 30, 2023) requires substantial cash flow for debt service, reducing funds for other purposes and increasing vulnerability to economic downturns. Some debt is at variable interest rates, posing a risk in a rising rate environment[128](index=128&type=chunk)[130](index=130&type=chunk) - **Tax Classification:** The company benefits from reduced real estate taxes due to the agricultural classification of its land. Changes in this classification could significantly increase tax liabilities[114](index=114&type=chunk) [Unresolved Staff Comments](index=22&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments - None[134](index=134&type=chunk) [Properties](index=23&type=section&id=Item%202.%20Properties) Alico owns approximately 72,000 acres in Florida, primarily for citrus groves and land management, with a significant portion encumbered by debt | Primary Use | Total Acreage | Key Counties | | :--- | :--- | :--- | | **Alico Citrus** | **48,949** | DeSoto, Hendry, Polk, Collier | | Citrus Groves | 48,927 | DeSoto (21,590), Hendry (8,900) | | Citrus Nursery | 22 | DeSoto (22) | | **Land Management** | **22,854** | Hendry, Collier, Glades | | Ranch & Other | 22,328 | Hendry (18,722), Collier (3,606) | | Mining | 526 | Glades (526) | | **Total** | **71,803** | | - Approximately 48,949 acres of the properties are encumbered by credit agreements totaling **$216.5 million**, with **$104.6 million** outstanding at September 30, 2023[136](index=136&type=chunk) [Legal Proceedings](index=23&type=section&id=Item%203.%20Legal%20Proceedings) The company is not currently involved in material legal proceedings, as prior class action and shareholder derivative suits were dismissed - There are no current legal proceedings expected to have a material adverse effect on the company's financial position[345](index=345&type=chunk) - A class action lawsuit and a shareholder derivative suit filed in early 2023 were both voluntarily dismissed by the plaintiffs in August 2023[346](index=346&type=chunk)[347](index=347&type=chunk) [Mine Safety Disclosures](index=23&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not Applicable[139](index=139&type=chunk) PART II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=24&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Alico's common stock trades on Nasdaq, with 394 holders of record, and the quarterly dividend was significantly reduced in December 2022 - The company's common stock trades on the Nasdaq Global Select Market under the symbol ALCO[142](index=142&type=chunk) - The Board of Directors reduced the quarterly dividend to **$0.05** per common share in December 2022, down from a previous **$0.50** per share[133](index=133&type=chunk)[146](index=146&type=chunk) [Reserved](index=24&type=section&id=Item%206.%20Reserved) This item is reserved [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) FY2023 revenues declined significantly due to Hurricane Ian, impacting citrus and net income, with liquidity supported by operations and asset sales [Consolidated Results of Operations](index=25&type=section&id=7.1%20Consolidated%20Results%20of%20Operations) Total operating revenues decreased **56.7%** to **$39.8 million** in FY2023 due to Hurricane Ian, leading to a significant drop in net income | (in thousands) | FY 2023 | FY 2022 | Change (%) | | :--- | :--- | :--- | :--- | | Total operating revenues | $39,846 | $91,947 | (56.7)% | | Gross profit (loss) | $6,446 | $(14,765) | (143.7)% | | (Loss) income from operations | $(4,197) | $(24,844) | (83.1)% | | Net income attributable to Alico, Inc. | $1,835 | $12,459 | (85.3)% | [Alico Citrus Segment Analysis](index=27&type=section&id=7.2%20Alico%20Citrus) Alico Citrus revenue plummeted **57.5%** to **$38.1 million** in FY2023 due to Hurricane Ian, partially offset by insurance proceeds | Alico Citrus (in thousands, except per unit data) | FY 2023 | FY 2022 | Change (%) | | :--- | :--- | :--- | :--- | | **Operating Revenues** | **$38,145** | **$89,681** | **(57.5)%** | | Total Boxes Harvested | 2,689 | 5,540 | (51.5)% | | Total Pound Solids Produced | 13,288 | 28,790 | (53.8)% | | Price per Pound Solids (Valencia) | $2.75 | $2.68 | 2.6% | | **Operating Expenses** | **$32,959** | **$106,192** | **(69.0)%** | - The decrease in revenue was primarily due to increased fruit drop caused by Hurricane Ian, reducing the harvest of both Early/Mid-Season and Valencia fruit[159](index=159&type=chunk) - Operating expenses were significantly reduced by the receipt of approximately **$27.4 million** in crop insurance and **$0.8 million** in property/casualty reimbursements for Hurricane Ian[165](index=165&type=chunk)[168](index=168&type=chunk) [Land Management and Other Operations Segment Analysis](index=29&type=section&id=7.3%20Land%20Management%20and%20Other%20Operations) Land Management revenue decreased **24.9%** to **$1.7 million** in FY2023, primarily due to reduced grazing and hunting lease income from ranch land sales | (in thousands) | FY 2023 | FY 2022 | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenue | $1,701 | $2,266 | (24.9)% | | Operating Expenses | $441 | $520 | (15.2)% | - The decrease in revenue was mainly due to a reduction in grazing and hunting lease income following the sale of ranch land[171](index=171&type=chunk) [Liquidity and Capital Resources](index=30&type=section&id=7.4%20Liquidity%20and%20Capital%20Resources) Working capital increased to **$43.7 million** in FY2023, with liquidity supported by cash, asset sales, and available credit lines despite cash used in operations | (in thousands) | Sep 30, 2023 | Sep 30, 2022 | | :--- | :--- | :--- | | Working capital | $43,740 | $15,091 | | Total assets | $428,353 | $409,255 | | Principal amount of debt | $129,319 | $111,624 | | Debt ratio | 0.30 to 1 | 0.27 to 1 | | Cash Flows (in thousands) | FY 2023 | FY 2022 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(6,254) | $6,523 | | Net cash (used in) provided by investing activities | $(4,123) | $22,468 | | Net cash provided by (used in) financing activities | $13,204 | $(29,012) | - The company has a **$70 million** working capital line of credit and a **$25 million** revolving line of credit, with substantial availability under both as of September 30, 2023[180](index=180&type=chunk) [Critical Accounting Policies and Estimates](index=31&type=section&id=7.5%20Critical%20Accounting%20Policies%20and%20Estimates) Critical accounting policies involve significant judgment in revenue recognition, inventory valuation (especially unharvested crops and casualty losses), and income tax estimates - **Revenue Recognition:** Revenue is recognized upon delivery, but initial amounts are often estimated based on contractual floor/ceiling prices and market conditions, requiring subsequent adjustments[191](index=191&type=chunk) - **Inventories:** Costs of growing crops are capitalized. In the event of a casualty loss like a hurricane, management must estimate the fruit drop and expected production to determine any necessary write-down to net realizable value[192](index=192&type=chunk) - **Income Taxes:** The company must assess the need for a valuation allowance against deferred tax assets, considering future taxable income and tax planning strategies. A valuation allowance of **$4.2 million** was recorded as of September 30, 2023[194](index=194&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=34&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company's primary market risk is interest rate risk on variable-rate debt, with no exposure to foreign exchange, equity price, or commodity price risks - The company is subject to interest rate risk on its variable-rate debt. A **1%** increase in prevailing interest rates would have increased annual interest expense by approximately **$438,000** for FY2023[203](index=203&type=chunk) - The company has no exposure to foreign-exchange rate risk as all transactions are in U.S. dollars[203](index=203&type=chunk) [Financial Statements and Supplementary Data](index=34&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents audited financial statements with an unqualified auditor's opinion, highlighting unharvested fruit crop inventory valuation as a critical audit matter - The independent auditor, RSM US LLP, issued an unqualified opinion on the financial statements and the effectiveness of internal control over financial reporting as of September 30, 2023[212](index=212&type=chunk)[224](index=224&type=chunk) - A critical audit matter was identified concerning the net realizable value of unharvested fruit crop on trees, due to the significant management judgments involved in estimating future crop yield and citrus pricing[217](index=217&type=chunk)[218](index=218&type=chunk) [Note 2: Summary of Significant Accounting Policies](index=45&type=section&id=Note%202.%20Summary%20of%20Significant%20Accounting%20Policies) Key accounting policies cover revenue recognition for fruit sales and services, inventory valuation (growing crops), property and equipment depreciation, and annual goodwill impairment testing - Revenue from fruit sales is recognized upon delivery, with the transaction price subject to variable consideration based on market prices, often within a contractual floor and ceiling[252](index=252&type=chunk)[253](index=253&type=chunk) - Costs of growing crops are capitalized into inventory and expensed as cost of sales upon harvest. Inventories are valued at the lower of cost or net realizable value[269](index=269&type=chunk) - The company's largest customer, Tropicana, accounted for **81.3%** of total revenue in FY2023[266](index=266&type=chunk) [Note 3: Inventories](index=50&type=section&id=Note%203.%20Inventories) Total inventories were **$52.5 million** as of September 30, 2023, with unharvested fruit crop significantly impacted by Hurricane Ian, leading to **$28.2 million** in insurance proceeds | Inventories (in thousands) | Sep 30, 2023 | Sep 30, 2022 | | :--- | :--- | :--- | | Unharvested fruit crop on the trees | $50,699 | $26,717 | | Other | $1,782 | $965 | | **Total inventories** | **$52,481** | **$27,682** | - In FY2023, the company received insurance proceeds of approximately **$27.4M** for crop claims and **$839k** for property damage related to Hurricane Ian[285](index=285&type=chunk) - The company also received **$1.3M**, **$1.1M**, and **$4.3M** in federal relief from the Hurricane Irma CRBG program in fiscal years 2023, 2022, and 2021, respectively[287](index=287&type=chunk) [Note 6: Long-Term Debt and Lines of Credit](index=52&type=section&id=Note%206.%20Long-Term%20Debt%20and%20Lines%20of%20Credit) Total long-term debt and lines of credit amounted to **$129.3 million** as of September 30, 2023, including fixed and variable-rate loans, with variable rates increasing | Debt Summary (in thousands) | Sep 30, 2023 | | :--- | :--- | | Met fixed-rate term loans | $70,000 | | Met variable-rate term loans | $19,094 | | Pru loans A & B | $11,615 | | WCLC outstanding | $24,722 | | **Total Future Maturities** | **$129,319** | - The company has a **$70M** working capital line of credit (WCLC) and a **$25M** revolving line of credit (RLOC), with **$45.0M** and **$25.0M** available, respectively, at year-end[299](index=299&type=chunk) - Interest rates on variable-rate debt have transitioned from LIBOR to SOFR-based rates. The rate on the Met Variable-Rate Term Loans was **7.52%** at Sept 30, 2023, up from **4.27%** a year prior[302](index=302&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=62&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None[350](index=350&type=chunk) [Controls and Procedures](index=62&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded disclosure controls were effective as of September 30, 2023, having remediated a material weakness related to income tax provision processes - Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of September 30, 2023[352](index=352&type=chunk) - The company has remediated a previously disclosed material weakness related to controls over the income tax provision and the evaluation of misstatements[353](index=353&type=chunk) - Remediation measures included designing and implementing new controls for the income tax provision, hiring personnel with added expertise, and changing the process for evaluating misstatements[354](index=354&type=chunk) [Other Information](index=63&type=section&id=Item%209B.%20Other%20Information) Alico entered a material agreement to sell **17,229 acres** of Alico Ranch to the State of Florida for approximately **$77.6 million** under the Florida Forever Program - On September 18, 2023, the company entered into an Option Agreement to sell **17,229 acres** of the Alico Ranch to the State of Florida for approximately **$77.6 million**[359](index=359&type=chunk) - The sale is part of the Florida Forever Program and proceeds are intended to be used to repay variable rate debt and for general corporate purposes[359](index=359&type=chunk) PART III [Directors, Executive Officers and Corporate Governance](index=64&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) This section provides biographical information for directors and executive officers, with additional details incorporated by reference from the Proxy Statement | Name | Position(s) | | :--- | :--- | | John E. Kiernan | Director, President and Chief Executive Officer | | George R. Brokaw | Chairman | | Katherine R. English | Director | | Benjamin D. Fishman | Director | | W. Andrew Krusen, Jr. | Director | | Toby K. Purse | Director | | Adam H. Putnam | Director | | Henry R. Slack | Director | | Name | Position(s) | | :--- | :--- | | John E. Kiernan | Director, President and Chief Executive Officer | | Bradley Heine | Chief Financial Officer | | Danny Sutton | President of Alico Citrus | | James Sampel | Chief Information Officer | - The company has adopted a Code of Business Conduct and Ethics, which is available on its website[377](index=377&type=chunk) [Executive Compensation](index=66&type=section&id=Item%2011.%20Executive%20Compensation) Executive compensation information is incorporated by reference from the definitive Proxy Statement for the 2024 Annual Meeting of Stockholders - Information is incorporated by reference from the definitive Proxy Statement for the 2024 Annual Meeting of Stockholders[379](index=379&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=66&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) This section details equity compensation arrangements under the 2015 Stock Incentive Plan, with **1,145,183** securities available for future issuance | Equity Compensation Plan Information | As of Sep 30, 2023 | | :--- | :--- | | Securities to be issued upon exercise of outstanding options | 38,000 | | Weighted-average exercise price of outstanding options | $33.75 | | Securities remaining available for future issuance | 1,145,183 | [Certain Relationships and Related Transactions, and Director Independence](index=67&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information on certain relationships, related transactions, and director independence is incorporated by reference from the definitive Proxy Statement - Information is incorporated by reference from the definitive Proxy Statement for the 2024 Annual Meeting of Stockholders[382](index=382&type=chunk) [Principal Accountant Fees and Services](index=67&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information on principal accountant fees and services is incorporated by reference from the definitive Proxy Statement - Information is incorporated by reference from the definitive Proxy Statement for the 2024 Annual Meeting of Stockholders[383](index=383&type=chunk) PART IV [Exhibits and Financial Statement Schedules](index=68&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists financial statements and exhibits, including credit agreements, employment agreements, and the recent land sale option agreement - The Consolidated Financial Statements are included in Part II, Item 8 of the report[385](index=385&type=chunk) - The Exhibit Index lists all documents filed or incorporated by reference, including credit agreements, employment agreements, and other material contracts[387](index=387&type=chunk) [Form 10-K Summary](index=72&type=section&id=Item%2016.%20Form%2010-K%20Summary) This item is not applicable - Not applicable[393](index=393&type=chunk)

Financial Data and Key Metrics Changes - For the three months ended June 30, 2023, the company reported net income attributable to Alico common stockholders of approximately $11.8 million, compared to $2.7 million for the same period in the prior year [12] - Total operating revenue for the quarter was approximately $7.3 million, down from $25.9 million for the same quarter in 2022, primarily due to a decrease in Valencia fruit harvested [14] - Adjusted EBITDA was approximately a loss of $1.3 million for the third quarter ended June 30, 2023, compared to a gain of $2.8 million for the same period in the prior fiscal year [21] Business Line Data and Key Metrics Changes - Citrus revenue for the quarter was approximately $6.7 million, down from $25.5 million in the same quarter of the previous year, driven by a decrease in Valencia fruit harvested [14] - The decrease in Valencia box production was down 49%, while the USDA forecasted a decrease of 55% for the Valencia crop [15][16] - The company experienced a 4.4% improvement in the price per pound solids for the three months ended June 30, 2023, due to lower production leading to reduced inventory levels [16] Market Data and Key Metrics Changes - The overall Florida orange crop is expected to decrease from approximately 41.2 million boxes for the 2021-2022 crop year to approximately 15.9 million boxes for the 2022-2023 crop year, a decrease of approximately 61.5% [15] - The Early and Mid-season crop for the season was down 55%, aligning closely with the USDA's forecast of a 56.5% decline [15] Company Strategy and Development Direction - The company is focused on caretaking for its groves and is optimistic about the upcoming harvest season, expecting substantial increases in harvested fruit due to consistent grove caretaking practices and new citrus greening therapy [4][23] - Alico aims to provide investors with the benefits of conventional agricultural investment while enhancing optionality through active land management [24] Management's Comments on Operating Environment and Future Outlook - Management expressed guarded optimism for the upcoming citrus harvest season, citing the recovery from Hurricane Ian and the application of new citrus greening therapy [4][23] - The company is awaiting federal relief funds related to Hurricane Ian and is actively working with industry groups to finalize relief programs [7][24] Other Important Information - The company received approximately $21.4 million in crop insurance proceeds through June 30, 2023, and an additional $0.3 million in July [5] - Alico sold approximately 1,436 acres of ranch land for net proceeds of approximately $7.6 million and is engaged with third parties for additional land sales [11] Q&A Session Summary Question: What is the initial take on the trees and harvest for the 2023-2024 season? - Management indicated it is too early to make forecasts, but inspections show no permanent damage from Hurricane Ian [27] Question: When will a better view of the harvest be available? - Management suggested waiting until closer to the harvest for more accurate estimates [29] Question: What is the size of the Punta Gorda grove? - The Punta Gorda grove is approximately 1,000 acres [31] Question: What are the costs associated with the OTC treatment? - The cost per tree for the OTC treatment has likely decreased to below $1 per application due to economies of scale [33] Question: Can you provide details on the Tropicana contract laddering? - The Tropicana contract extended is one of the smaller contracts, with larger contracts expiring at the end of the next harvest [35]

```markdown [Part I - FINANCIAL INFORMATION](index=2&type=section&id=Part%20I%20-%20FINANCIAL%20INFORMATION) [Condensed Consolidated Financial Statements](index=2&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements) Alico, Inc.'s unaudited condensed consolidated financial statements for the three and nine months ended June 30, 2023, and 2022, are presented [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheet Summary (in thousands) | Account | June 30, 2023 | September 30, 2022 | | :--- | :--- | :--- | | **Total current assets** | $47,695 | $31,616 | | **Total assets** | $421,126 | $409,255 | | **Total current liabilities** | $15,389 | $16,525 | | **Total liabilities** | $171,474 | $160,390 | | **Total stockholders' equity** | $249,652 | $248,865 | - **Total current assets** increased primarily due to **higher inventories** (**$38.8 million** vs **$27.7 million**) and **accounts receivable** (**$4.4 million** vs **$0.3 million**) compared to September 30, 2022[14](index=14&type=chunk) - **Total liabilities** increased, driven mainly by a rise in borrowings on lines of credit from **$4.9 million** to **$17.9 million**[14](index=14&type=chunk) [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Statement of Operations Summary (in thousands, except per share) | Metric | Q3 2023 | Q3 2022 | YTD 2023 | YTD 2022 | | :--- | :--- | :--- | :--- | :--- | | **Total operating revenues** | $7,284 | $25,938 | $39,166 | $90,916 | | **Gross profit** | $15,502 | $1,311 | $5,373 | $7,121 | | **Income (loss) from operations** | $12,572 | $(1,246) | $(2,733) | $(558) | | **Net income attributable to Alico** | $11,832 | $2,706 | $895 | $33,539 | | **Diluted EPS** | $1.56 | $0.36 | $0.12 | $4.44 | - **Operating revenues** for the nine months ended June 30, 2023, **decreased significantly** to **$39.2 million** from **$90.9 million** in the prior year, primarily due to **lower citrus production**[15](index=15&type=chunk) - **Gross profit** for Q3 2023 was **substantially higher** at **$15.5 million** compared to **$1.3 million** in Q3 2022, largely due to the recognition of insurance proceeds which reduced operating expenses[15](index=15&type=chunk) - **Gain on sale of real estate**, property and equipment was **significantly lower** in the first nine months of 2023 (**$7.4 million**) compared to the same period in 2022 (**$40.8 million**)[15](index=15&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash Flow Summary for Nine Months Ended June 30 (in thousands) | Activity | 2023 | 2022 | | :--- | :--- | :--- | | **Net cash (used in) provided by operating activities** | $(618) | $10,792 | | **Net cash (used in) provided by investing activities** | $(5,718) | $27,535 | | **Net cash provided by (used in) financing activities** | $7,063 | $(29,684) | | **Net increase in cash** | $727 | $8,643 | - **Cash from operations** turned **negative** for the nine months ended June 30, 2023, a **significant shift** from the **positive $10.8 million** in the prior year, mainly due to **lower net income** before non-cash items[25](index=25&type=chunk) - **Investing activities** used cash, driven by **lower proceeds from asset sales** (**$7.6 million** in 2023 vs. **$42.7 million** in 2022)[25](index=25&type=chunk) - **Financing activities** provided cash, **primarily from increased net borrowings** on revolving lines of credit[25](index=25&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) - The company operates in two segments: **Alico Citrus** and **Land Management and Other Operations**[26](index=26&type=chunk)[31](index=31&type=chunk) - The company recognized **significant insurance proceeds** of **$21.4 million** in the nine months ended June 30, 2023, related to **Hurricane Ian** crop claims, which were recorded as a reduction in operating expenses[55](index=55&type=chunk) - The company sold approximately **1,436 acres** of land for total proceeds of approximately **$7.6 million** during the first nine months of fiscal 2023, recognizing a **gain of $7.4 million**[58](index=58&type=chunk)[59](index=59&type=chunk)[60](index=60&type=chunk) - The company is involved in two **legal proceedings**, a **class action** (Sinder matter) and a **shareholder derivative complaint** (Assad matter), both of which management believes are **without merit**[118](index=118&type=chunk)[120](index=120&type=chunk)[121](index=121&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial condition, operating results, segment performance, liquidity, and capital resources [Recent Developments](index=26&type=section&id=Recent%20Developments) - **Hurricane Ian**, which made landfall in September 2022, **significantly impacted** fiscal year 2023 fruit production, with recovery to pre-hurricane levels potentially taking up to two full seasons[133](index=133&type=chunk) - As of June 30, 2023, the company has received approximately **$21.4 million** in crop insurance proceeds and **$0.8 million** in property damage claims related to **Hurricane Ian**[134](index=134&type=chunk) - The company began treating its trees with a new application of **Oxytetracycline (OTC)** in January 2023 to mitigate the impacts of citrus greening, with over **35%** of trees treated as of June 30, 2023[135](index=135&type=chunk) - The company received the final portion of **Hurricane Irma federal relief funds**, totaling **$1.3 million**, during the nine months ended June 30, 2023[141](index=141&type=chunk) [Condensed Consolidated Results of Operations](index=28&type=section&id=Condensed%20Consolidated%20Results%20of%20Operations) Consolidated Results of Operations (in thousands) | Metric | YTD 2023 | YTD 2022 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | **Total operating revenues** | $39,166 | $90,916 | $(51,750) | (56.9)% | | **Total gross profit** | $5,373 | $7,121 | $(1,748) | (24.5)% | | **Income (loss) from operations** | $(2,733) | $(558) | $(2,175) | NM | | **Net income attributable to Alico** | $895 | $33,539 | $(32,644) | (97.3)% | - The **significant decrease in revenue** for the nine months ended June 30, 2023, was **primarily driven by lower fruit production** due to **Hurricane Ian** and the termination of a major grove management services contract[149](index=149&type=chunk)[163](index=163&type=chunk) - Operating expenses decreased for the nine-month period, **largely due to inventory adjustments** made in late 2022 for **Hurricane Ian's** impact and the receipt of crop insurance reimbursements, which offset higher cultivation costs[154](index=154&type=chunk)[164](index=164&type=chunk) - **Net income** for the nine-month period **fell sharply**, primarily due to **significantly lower gains on the sale of real estate** compared to the prior year (**$7.4 million** in YTD 2023 vs. **$40.8 million** in YTD 2022)[168](index=168&type=chunk) [Segment Analysis](index=29&type=section&id=Segment%20Analysis) - **Alico Citrus**: Revenue for the nine months ended June 30, 2023, fell **57.5%** to **$37.9 million** from **$89.3 million** year-over-year, caused by a **51.4%** decrease in total boxes harvested due to **Hurricane Ian** and the termination of a major grove management contract[145](index=145&type=chunk)[149](index=149&type=chunk)[152](index=152&type=chunk) - The company's overall citrus production decrease of **51.4%** was **less severe** than the USDA's forecast for the entire Florida orange crop, which projected a **61.5%** decline for the 2022-23 season[153](index=153&type=chunk) - **Land Management and Other Operations**: Revenue for the nine months ended June 30, 2023, decreased by **22.1%** to **$1.2 million**, primarily due to reduced grazing and hunting lease revenue following sales of portions of the Alico Ranch[159](index=159&type=chunk)[161](index=161&type=chunk) [Liquidity and Capital Resources](index=33&type=section&id=Liquidity%20and%20Capital%20Resources) Working Capital Summary (in thousands) | Metric | June 30, 2023 | September 30, 2022 | | :--- | :--- | :--- | | **Working capital** | $32,306 | $15,091 | | **Current ratio** | 3.10 to 1 | 1.91 to 1 | - The company's primary sources of liquidity are cash from operations, asset sales, and credit facilities, which management believes are sufficient to meet needs for at least the next twelve months[173](index=173&type=chunk)[176](index=176&type=chunk) - As of June 30, 2023, the company had approximately **$51.8 million** available on its **$70 million** working capital line of credit and **$25 million** available on its revolving line of credit[177](index=177&type=chunk) - The company was in compliance with **all financial covenants** as of June 30, 2023[179](index=179&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=36&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Primary market risk is interest rate fluctuations on variable rate debt, with no exposure to foreign exchange, commodity, or equity risks - The company is subject to **interest rate risk** on its **variable rate debt**, where a **one-percentage-point** increase in interest rates would have increased interest expense by approximately **$100,000** for the three months ended June 30, 2023[190](index=190&type=chunk) [Controls and Procedures](index=36&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were ineffective due to material weaknesses in internal control over financial reporting - As of June 30, 2023, **disclosure controls and procedures** were deemed **not effective** due to **ongoing material weaknesses** in internal control over financial reporting[195](index=195&type=chunk) - The **material weaknesses** identified relate to controls around the completeness and accuracy of information used for the **income tax provision** and the design of effective controls for evaluating **financial statement misstatements**[198](index=198&type=chunk)[200](index=200&type=chunk) - Management has implemented a **remediation plan**, including enhanced reconciliation and review processes for the tax provision and formal documentation for the evaluation of any misstatements[198](index=198&type=chunk) [Part II - OTHER INFORMATION](index=38&type=section&id=Part%20II%20-%20OTHER%20INFORMATION) [Legal Proceedings](index=38&type=section&id=Item%201.%20Legal%20Proceedings) The company is a defendant in a securities class action and a shareholder derivative complaint, both believed to be without merit - A **class action complaint** (Sinder v. Alico, Inc.) was filed on February 17, 2023, alleging false and misleading statements related to the company's financial reporting and restatement[203](index=203&type=chunk) - A **shareholder derivative complaint** (Assad v. Brokaw et al.) was filed on March 7, 2023, with substantially similar allegations, and proceedings in this matter are **currently stayed**[204](index=204&type=chunk) - Management believes the claims in both legal matters are **without merit** and does not anticipate a **material adverse impact** on the company's financial condition[205](index=205&type=chunk) [Risk Factors](index=38&type=section&id=Item%201A.%20Risk%20Factors) No material changes have occurred in the company's risk factors since the filing of its 2022 Annual Report on Form 10-K - **No material changes** have occurred in the company's **risk factors** since the filing of its 2022 Annual Report on Form 10-K[206](index=206&type=chunk) [Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities](index=38&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%2C%20Use%20of%20Proceeds%2C%20and%20Issuer%20Purchases%20of%20Equity%20Securities) No unregistered equity securities were sold or repurchased by the issuer during the quarter ended June 30, 2023 - There were **no sales of unregistered equity securities** or **issuer repurchases of equity securities** during the reported period[207](index=207&type=chunk) ```

Alico, Inc. (NASDAQ:ALCO) Q2 2023 Earnings Conference Call May 4, 2023 8:30 AM ET Company Participants John Kiernan - President and Chief Executive Officer Perry Del Vecchio - Chief Financial Officer Conference Call Participants Operator Ladies and gentlemen, welcome to Alico's Second Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. As a reminder, today's conference is being recorded. Earlier today, the company issued a press release announcing its results for ...

[Part I - FINANCIAL INFORMATION](index=2&type=section&id=Part%20I%20-%20FINANCIAL%20INFORMATION) [Item 1. Condensed Consolidated Financial Statements](index=2&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements) Financial performance declined significantly, with revenues falling, leading to a net loss and negative operating cash flow Condensed Consolidated Balance Sheet Summary (in thousands) | Account | March 31, 2023 (Unaudited) | September 30, 2022 | | :--- | :--- | :--- | | **Total current assets** | $36,973 | $31,616 | | **Total assets** | $411,561 | $409,255 | | **Total current liabilities** | $14,311 | $16,525 | | **Total liabilities** | $174,240 | $160,390 | | **Total stockholders' equity** | $237,321 | $248,865 | - Total stockholders' equity decreased from **$248.9 million** at September 30, 2022, to **$237.3 million** at March 31, 2023, primarily due to a net loss and dividend payments[11](index=11&type=chunk) - Lines of credit increased significantly from **$4.9 million** to **$21.1 million**, indicating increased reliance on short-term borrowing[11](index=11&type=chunk) Condensed Consolidated Statements of Operations Summary (in thousands, except per share data) | Metric | Three Months Ended Mar 31, 2023 | Three Months Ended Mar 31, 2022 | Six Months Ended Mar 31, 2023 | Six Months Ended Mar 31, 2022 | | :--- | :--- | :--- | :--- | :--- | | Total operating revenues | $21,294 | $49,641 | $31,882 | $64,978 | | Gross (loss) profit | $(6,328) | $3,999 | $(10,129) | $5,810 | | Net (loss) income attributable to Alico | $(7,787) | $20,702 | $(10,937) | $30,833 | | Diluted EPS | $(1.02) | $2.74 | $(1.44) | $4.08 | - For the six months ended March 31, 2023, the company reported a **net loss of $10.9 million**, a significant downturn from the **$30.8 million net income** in the prior-year period, largely due to a 50.9% decrease in operating revenues[12](index=12&type=chunk) - Gain on sale of real estate, property and equipment **decreased from $35.0 million** in the first six months of fiscal 2022 to **$4.8 million** in the same period of fiscal 2023, significantly impacting other income and overall profitability[12](index=12&type=chunk) Condensed Consolidated Statements of Cash Flows Summary (in thousands) | Cash Flow Activity | Six Months Ended Mar 31, 2023 | Six Months Ended Mar 31, 2022 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(7,110) | $8,798 | | Net cash (used in) provided by investing activities | $(4,111) | $25,998 | | Net cash provided by (used in) financing activities | $10,504 | $(9,506) | | **Net (decrease) increase in cash** | **$(717)** | **$25,290** | - Cash from operations turned negative, with a **net use of $7.1 million** for the six months ended March 31, 2023, compared to a **net provision of $8.8 million** in the prior year, reflecting the sharp decline in net income[23](index=23&type=chunk) - Net proceeds from the sale of real estate and other assets **decreased from $36.7 million to $4.9 million** year-over-year, causing a significant swing in cash from investing activities[23](index=23&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail the business structure, accounting policies, and significant events including Hurricane Ian's impact and a debt covenant waiver - The company operates through two segments: **Alico Citrus** and **Land Management and Other Operations**[24](index=24&type=chunk)[29](index=29&type=chunk) - Due to Hurricane Ian, the company recorded a **$1.6 million adjustment** to reduce inventory to net realizable value for the six months ended March 31, 2023; insurance proceeds of **$4.76 million** were received during the same period[51](index=51&type=chunk)[53](index=53&type=chunk) - As of March 31, 2023, the company was **not in compliance with its minimum debt service coverage ratio covenant** but obtained a waiver from the lender, Rabo, for the quarter[78](index=78&type=chunk) - The company is a defendant in a class action lawsuit (Sinder v Alico, Inc) and a shareholder derivative complaint (Assad v Brokaw et al) related to its December 2022 financial restatement[122](index=122&type=chunk)[123](index=123&type=chunk)[125](index=125&type=chunk) - Subsequent to the quarter's end, in April 2023, the company received an additional **$8.9 million** in Hurricane Ian crop insurance proceeds and **$838,000** for property damage claims[129](index=129&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes poor performance to Hurricane Ian's impact on citrus production and the termination of a key services contract [Business Overview and Recent Developments](index=27&type=section&id=Business%20Overview%20and%20Recent%20Developments) - **Hurricane Ian impacted a majority of the company's groves**, affecting fiscal year 2023 fruit production, with recovery expected to take up to two full seasons[140](index=140&type=chunk) - The company began treating its trees with a new application of Oxytetracycline (OTC) in January 2023 to mitigate the impacts of citrus greening, with benefits not measurable until the fiscal 2024 harvest[142](index=142&type=chunk) - During the first half of fiscal 2023, the company sold approximately **888 acres of land** for total proceeds of about **$4.9 million**[144](index=144&type=chunk)[145](index=145&type=chunk) - The company received the final portion of Hurricane Irma federal relief funds, amounting to **$1.266 million**, in the first quarter of fiscal 2023[148](index=148&type=chunk) [Condensed Consolidated Results of Operations](index=30&type=section&id=Condensed%20Consolidated%20Results%20of%20Operations) Alico Citrus Segment Performance - Six Months Ended March 31 | Metric | 2023 | 2022 | % Change | | :--- | :--- | :--- | :--- | | Total Revenue (in thousands) | $31,205 | $63,780 | (51.1)% | | Total Boxes Harvested (in thousands) | 2,273 | 4,146 | (45.2)% | | Total Pound Solids Produced (in thousands) | 11,146 | 20,815 | (46.5)% | - The decrease in Alico Citrus revenue was driven by lower processed box production for both Early/Mid-Season (**down 55.0%**) and Valencia (**down 33.4%**) crops due to Hurricane Ian[156](index=156&type=chunk) - Grove Management Services revenue **decreased by 93.0%** for the six-month period, as a key group of third-party grove owners exited the citrus business in June 2022[151](index=151&type=chunk)[158](index=158&type=chunk) - Land Management and Other Operations revenue **decreased by 43.5%** for the six-month period, primarily due to reduced grazing and hunting lease income resulting from the sale of portions of the Alico Ranch[165](index=165&type=chunk)[168](index=168&type=chunk) - Other income, net, **decreased by 92.9%** for the six-month period, mainly because gains from real estate sales fell to **$4.8 million** from **$35.0 million** in the prior-year period[149](index=149&type=chunk)[177](index=177&type=chunk) [Liquidity and Capital Resources](index=35&type=section&id=Liquidity%20and%20Capital%20Resources) Working Capital Summary (in thousands) | Metric | March 31, 2023 | September 30, 2022 | | :--- | :--- | :--- | | Total current assets | $36,973 | $31,616 | | Total current liabilities | $14,311 | $16,525 | | **Working capital** | **$22,662** | **$15,091** | - Management believes existing cash, cash from operations, asset sales, and credit lines will provide sufficient liquidity for at least the next twelve months[183](index=183&type=chunk)[184](index=184&type=chunk) - As of March 31, 2023, the company had approximately **$48.6 million** available on its $70 million working capital line of credit and **$25 million** available on its revolving line of credit[185](index=185&type=chunk) - Net cash used in operating activities was **$7.1 million** for the first six months of fiscal 2023, a reversal from **$8.8 million** provided by operations in the prior year, mainly due to lower box production and the termination of a grove management contract[189](index=189&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=39&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate fluctuation on its variable rate debt, with no other significant exposures - The company is subject to interest rate risk on its variable rate debt; a **one-percentage-point increase** in prevailing interest rates would have increased interest expense by approximately **$100,000** for the three months ended March 31, 2023[196](index=196&type=chunk) - The company does not use derivative financial instruments for trading or speculative purposes[195](index=195&type=chunk) [Item 4. Controls and Procedures](index=39&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were ineffective due to ongoing material weaknesses in internal control over financial reporting - Management concluded that as of March 31, 2023, the company's disclosure controls and procedures were **not effective** at a reasonable assurance level[201](index=201&type=chunk) - The ineffectiveness is due to two ongoing material weaknesses: one related to controls around the **income tax provision** and another related to the **evaluation of misstatements'** impact on financial statements[204](index=204&type=chunk)[205](index=205&type=chunk) - A remediation plan has been designed and is being implemented to address these weaknesses, involving improved reconciliation, documentation, review, and approval processes for the tax provision and misstatement evaluations[204](index=204&type=chunk) [Part II - OTHER INFORMATION](index=41&type=section&id=Part%20II%20-%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=41&type=section&id=Item%201.%20Legal%20Proceedings) The company is defending a class action and a shareholder derivative complaint related to its 2022 financial restatement - A class action complaint (Sinder v Alico, Inc) was filed on February 17, 2023, alleging violations of the Exchange Act related to false and misleading statements regarding financial reporting and a subsequent restatement[208](index=208&type=chunk) - A shareholder derivative complaint (Assad v Brokaw et al) was filed on March 7, 2023, asserting breach of fiduciary duty and unjust enrichment based on similar allegations as the class action[209](index=209&type=chunk) - The company believes the claims in both legal matters are **without merit** and does not anticipate a material adverse impact on its financial condition[210](index=210&type=chunk) [Item 1A. Risk Factors](index=41&type=section&id=Item%201A.%20Risk%20Factors) No material changes to previously disclosed risk factors were reported during the period - No material changes were reported in the company's risk factors from its most recent Form 10-K[211](index=211&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=41&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not engage in unregistered equity sales or share repurchases during the quarter - There were no sales of unregistered equity securities or issuer repurchases of equity securities during the reporting period[212](index=212&type=chunk) [Item 3. Defaults Upon Senior Securities](index=41&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) None [Item 4. Mine Safety Disclosure](index=41&type=section&id=Item%204.%20Mine%20Safety%20Disclosure) Not Applicable [Item 5. Other Information](index=41&type=section&id=Item%205.%20Other%20Information) None [Item 6. Exhibits](index=42&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the report, including a debt modification agreement and officer certifications - Exhibits filed include an Option To Defer Principal Payments agreement with Metropolitan Life Insurance Company and certifications from the CEO and CFO[217](index=217&type=chunk)

Alico Inc. (NASDAQ:ALCO) Q1 2023 Earnings Conference Call February 6, 2023 8:30 AM ET Company Participants John Kiernan - President, Chief Executive Officer Perry Del Vecchio - Chief Financial Officer Conference Call Participants Gerry Sweeney - Roth Capital Operator Welcome to Alico’s first quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode. As a reminder, today’s conference is being recorded. Earlier today, the company issued a press release announcing its re ...

Part I - FINANCIAL INFORMATION [Item 1. Condensed Consolidated Financial Statements](index=2&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements) The company's unaudited statements show a net loss of $3.2 million versus a prior-year net income of $10.1 million [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets and liabilities both increased slightly, driven by changes in current assets and credit line borrowings Balance Sheet Summary (in thousands) | Account | Dec 31, 2022 | Sep 30, 2022 | | :--- | :--- | :--- | | **Total Current Assets** | $37,555 | $31,616 | | **Total Assets** | $412,990 | $409,255 | | **Total Current Liabilities** | $10,225 | $16,525 | | **Total Liabilities** | $167,386 | $160,390 | | **Total Stockholders' Equity** | $245,604 | $248,865 | - Total assets slightly increased to **$413.0 million** as of December 31, 2022, from $409.3 million as of September 30, 2022, primarily due to an increase in current assets like accounts receivable and inventories[11](index=11&type=chunk) - Total liabilities increased to **$167.4 million**, mainly driven by a significant increase in borrowings on lines of credit from $4.9 million to $19.0 million[11](index=11&type=chunk) [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The company experienced a significant revenue decline and shifted from a net income to a net loss year-over-year Statement of Operations Summary (in thousands, except per share data) | Metric | Q1 2023 (ended Dec 31, 2022) | Q1 2022 (ended Dec 31, 2021) | | :--- | :--- | :--- | | **Total Operating Revenues** | $10,588 | $15,337 | | **Gross (Loss) Profit** | $(3,801) | $1,811 | | **Loss from Operations** | $(6,310) | $(773) | | **Net (Loss) Income** | $(3,186) | $10,080 | | **Net (Loss) Income Attributable to Alico** | $(3,150) | $10,131 | | **Diluted EPS** | $(0.41) | $1.34 | | **Cash Dividends per Share** | $0.05 | $0.50 | - Total operating revenues decreased by **31.0% YoY**, from $15.3 million to $10.6 million, primarily due to lower revenue from the Alico Citrus segment[12](index=12&type=chunk) - The company reported a **net loss of $3.2 million**, a significant shift from a net income of $10.1 million in the prior-year quarter, driven by lower revenues and a smaller gain on asset sales[12](index=12&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating cash usage remained stable, while investing activities used cash and financing activities provided cash Cash Flow Summary (in thousands) | Activity | Q1 2023 (ended Dec 31, 2022) | Q1 2022 (ended Dec 31, 2021) | | :--- | :--- | :--- | | **Net Cash Used in Operating Activities** | $(9,665) | $(9,608) | | **Net Cash (Used in) Provided by Investing Activities** | $(496) | $4,079 | | **Net Cash Provided by Financing Activities** | $9,565 | $4,712 | | **Net Decrease in Cash** | $(596) | $(817) | | **Cash at End of Period** | $269 | $69 | - Net cash used in operating activities remained stable at approximately **$(9.7) million**, reflecting the seasonal nature of the business where costs are incurred before harvest revenues are fully realized[18](index=18&type=chunk) - Investing activities used **$0.5 million in cash**, a sharp contrast to providing $4.1 million in the prior year, mainly due to lower proceeds from the sale of real estate[18](index=18&type=chunk) - Financing activities provided **$9.6 million in cash**, primarily from increased net borrowings on revolving lines of credit to fund operations[18](index=18&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail business segments, debt compliance, asset sales, and purchase commitments - The company operates two primary business segments: **Alico Citrus** (cultivation and management of citrus groves) and **Land Management and Other Operations** (leasing, conservation, etc)[19](index=19&type=chunk)[24](index=24&type=chunk) - In Q1 2023, the company sold approximately **609 acres for $3.3 million**, resulting in a gain of $3.2 million[48](index=48&type=chunk) - As of December 31, 2022, the company had total outstanding debt and lines of credit of **$125.0 million** and was in compliance with all financial covenants[56](index=56&type=chunk)[67](index=67&type=chunk) - The company has outstanding purchase commitments of approximately **$5.4 million** for citrus trees as of December 31, 2022[109](index=109&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the revenue decline and net loss, attributing them to Hurricane Ian and a terminated contract [Recent Developments](index=26&type=section&id=Recent%20Developments) Hurricane Ian significantly impacted groves, and the company is seeking federal relief while managing credit lines - **Hurricane Ian**, which made landfall on September 28, 2022, impacted a majority of the Company's groves, affecting fruit production[123](index=123&type=chunk) - The company is seeking **federal relief funds** made available through the Consolidated Appropriations Act to mitigate the financial impact of Hurricane Ian[126](index=126&type=chunk)[127](index=127&type=chunk) - The working capital line of credit was **extended to November 1, 2025**, and the interest rate benchmark was converted from LIBOR to SOFR[124](index=124&type=chunk) - The company received the final portion of Hurricane Irma federal relief funds, amounting to **$1.3 million** in Q1 2023, which is recorded as a reduction to operating expenses[128](index=128&type=chunk) [Condensed Consolidated Results of Operations](index=27&type=section&id=Condensed%20Consolidated%20Results%20of%20Operations) A 31% revenue drop and a 73% decrease in other income led to a significant net loss compared to the prior year Quarterly Results of Operations (in thousands) | Metric | Q1 2023 (ended Dec 31, 2022) | Q1 2022 (ended Dec 31, 2021) | Change (%) | | :--- | :--- | :--- | :--- | | **Total Operating Revenues** | $10,588 | $15,337 | (31.0)% | | **Total Gross (Loss) Profit** | $(3,801) | $1,811 | NM | | **Loss from Operations** | $(6,310) | $(773) | NM | | **Total Other Income, net** | $2,041 | $7,553 | (73.0)% | | **Net (Loss) Income** | $(3,186) | $10,080 | (131.6)% | - The significant decrease in revenue was primarily driven by a **30.4% decline** in the Alico Citrus segment[129](index=129&type=chunk) - Other income decreased by **73.0%** due to smaller gains on the sale of real estate in the current quarter ($3.2 million) compared to the prior-year quarter ($8.4 million)[149](index=149&type=chunk) [Segment Performance](index=28&type=section&id=Segment%20Performance) The Alico Citrus segment suffered from a terminated contract and hurricane impact, while Land Management revenue also fell - Alico Citrus revenue decreased primarily due to a **$3.2 million (94.5%) decline** in Grove Management Services after a major third-party client exited the citrus business[131](index=131&type=chunk)[134](index=134&type=chunk) - The Early and Mid-Season harvest was **negatively impacted by Hurricane Ian**, leading to accelerated harvesting, a 4.5% decrease in pound solids per box, and a 2.7% decrease in processed boxes[135](index=135&type=chunk) - Alico Citrus operating expenses increased by **6.8%** due to significant cost increases in fertilizer, herbicide, fuel, and additional costs for hurricane-related cleanup and repairs[131](index=131&type=chunk)[139](index=139&type=chunk) - Land Management and Other Operations revenue decreased by **45.7%**, mainly due to lower grazing and hunting lease revenue resulting from the sale of portions of the Alico Ranch[144](index=144&type=chunk)[145](index=145&type=chunk) [Liquidity and Capital Resources](index=32&type=section&id=Liquidity%20and%20Capital%20Resources) Working capital increased significantly, and management believes liquidity is sufficient for the next twelve months Liquidity Summary (in thousands) | Metric | Dec 31, 2022 | Sep 30, 2022 | | :--- | :--- | :--- | | **Cash and cash equivalents** | $269 | $865 | | **Working capital** | $27,330 | $15,091 | | **Principal amount of term loans and lines of credit** | $124,982 | $111,624 | - **Working capital increased significantly to $27.3 million** from $15.1 million, primarily due to a decrease in current liabilities, specifically accrued dividends and ad valorem taxes[73](index=73&type=chunk)[153](index=153&type=chunk) - The company had approximately **$50.7 million available** under its $70 million working capital line of credit and $25 million available under its revolving line of credit as of December 31, 2022[157](index=157&type=chunk) - Management believes that cash-on-hand, cash from operations, asset sales, and available credit lines will provide **sufficient liquidity** for at least the next twelve months[156](index=156&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=35&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company reports no material changes in its market risk disclosures from its last annual report - There have been **no material changes** in the company's quantitative and qualitative disclosures about market risk during the reporting period[167](index=167&type=chunk) [Item 4. Controls and Procedures](index=35&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were ineffective due to a material weakness in financial reporting - Management concluded that disclosure controls and procedures were **not effective** as of the end of the period covered by the report[168](index=168&type=chunk) - The ineffectiveness is due to a continuing **material weakness** related to controls around the income tax provision and the evaluation of financial statement misstatements[170](index=170&type=chunk)[171](index=171&type=chunk) - A **remediation plan** has been designed and is being implemented to address the control deficiencies, including instituting a more rigorous reconciliation process for the tax provision and documenting the evaluation of any misstatements[171](index=171&type=chunk)[172](index=172&type=chunk) Part II - OTHER INFORMATION [Item 1. Legal Proceedings](index=37&type=section&id=Item%201.%20Legal%20Proceedings) The company is not party to any legal proceedings expected to have a material adverse effect - There are **no current legal proceedings** expected to have a material adverse effect on the Company[176](index=176&type=chunk) [Item 1A. Risk Factors](index=37&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the risk factors disclosed in the company's latest Annual Report have occurred - **No material changes** have occurred in the risk factors from the company's most recent Form 10-K filing[177](index=177&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=37&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not engage in any unregistered equity sales or share repurchases during the quarter - There were **no sales of unregistered equity securities** during the reporting period[178](index=178&type=chunk) - The company **did not purchase any of its own equity securities** during the reporting period[178](index=178&type=chunk)

Financial Data and Key Metrics Changes - For the fiscal year ended September 30, 2022, the company reported net income attributable to Alico common stockholders of approximately $12.5 million, a decrease from approximately $34.9 million for the fiscal year ended September 30, 2021 [7][23] - Adjusted EBITDA for the fiscal year ended September 30, 2022, was approximately $13.4 million, down from approximately $25.3 million for the fiscal year ended September 30, 2021 [8][23] - Total operating revenue was $91.9 million for the fiscal year ended September 30, 2022, compared to $108.6 million for the fiscal year ended September 30, 2021 [13] Business Line Data and Key Metrics Changes - Citrus revenue decreased to $89.7 million for the fiscal year ended September 30, 2022, from $105.8 million for the fiscal year ended September 30, 2021, primarily due to lower box production and a reduction in Grove Management Services [13][14] - Operating revenue from Grove Management Services was approximately $11.9 million for the fiscal year ended September 30, 2022, down from $17 million in the previous fiscal year [17] Market Data and Key Metrics Changes - The USDA indicated that the Florida orange crop decreased by 22.5% to approximately 41.1 million boxes for the 2021/2022 harvest season, while Alico's box production declined by 12.9% [17] Company Strategy and Development Direction - The company plans to continue evaluating non-citrus assets and has sold approximately 9,400 acres of ranch land, with about 20,000 acres remaining for potential sale [11] - Future capital allocation decisions will focus on maximizing returns to shareholders, which may include acquiring additional citrus acres, repurchasing shares, or considering special dividends [11] Management's Comments on Operating Environment and Future Outlook - Management noted that fiscal year 2023 will see lower revenue due to reduced fruit availability and anticipated recovery of groves may take up to two seasons [7] - The company is working closely with industry groups and government agencies to seek federal relief for recovery from Hurricane Ian [9][38] Other Important Information - The company has improved its debt-to-equity ratio to 0.45 to 1 as of September 30, 2022, down from 0.50 to 1 a year ago, and has significantly reduced long-term debt levels [8][24] - Alico's Board of Directors voted to reduce the next quarterly common dividend to $0.05 per share due to the impact of recent storms [27] Q&A Session Summary Question: Insights on crop insurance status and timing - Management confirmed that crop insurance is in place for all acres, primarily catastrophic, and actual measurements will be taken at the end of the crop season [31] Question: Visibility on harvest quality and timing - Management indicated that visibility on the quality of the harvest will improve in a few weeks, with the Valencia season expected to start in mid-February [33][34] Question: Updates on federal relief - Management stated that there is limited visibility on federal relief funding, which is expected to be dependent on federal funding rather than state-driven programs [38][40] Question: Real estate market activity - Management noted continued demand for real estate, with several buyers negotiating or in contract stages for Alico Ranch properties [42]

Alico, Inc. (NASDAQ:ALCO) Q3 2022 Earnings Conference Call August 3, 2022 4:30 PM ET Company Participants John Kiernan – President and Chief Executive Officer Conference Call Participants Gerry Sweeney – ROTH Capital Operator Welcome to Alico's Third Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. As a reminder, today's conference is being recorded. Earlier today, the company issued a press release announcing its results for the third quarter ended June 30, 2 ...